WTO: JULY FRAMEWORK AGREED AT ELEVENTH HOUR

After long and arduous negotiations over the past two weeks, WTO Members on 31 July agreed on a framework package to keep the Doha Round trade negotiations alive. After almost a year of stalled negotiations following the breakdown of talks at the last Ministerial meeting in Cancun (see BRIDGES Daily Update, 15 September 2003), Members had set the end of July as a deadline for agreeing on a negotiating framework package. The 31 July agreement has allowed countries to send an important political message that the Doha Round is still alive. As some observers noted, the agreement came at a crucial time, as both the US Trade Representative Robert Zoellick and EC Trade Commissioner Pascal Lamy are soon to leave office, and US presidential elections will be held in November. While many WTO Members welcomed the agreement, civil society groups expressed strong criticism, in particular with regard to the "undemocratic" negotiating process.

During the two weeks between the release of the first draft July Framework (see http://www.ictsd.org/ministerial/cancun/docs/JOB(04)-96.pdf) and the final agreement, Members met in different configurations and groupings at the officials level in Geneva. A revised draft was initially expected as early as 26 July, but was eventually released on 30 July after negotiations at the ministerial level. Among the 30 ministers present in Geneva were Brazil's Celso Amorim, India's Kamal Nath, EC Trade Commissioner Pascal Lamy and US Trade Representative Robert Zoellick.

The key grouping of Five Interested Parties (FIPs) -- comprising the US, EC, Brazil, India and Australia -- met on agriculture both on 27 and 28 July, and eventually agreed on a text that formed the basis for the final agreement. The leading role played by the FIPs prompted strong reactions among other Members, especially the G-10 group of net-importers of agricultural products, and the G-33 group, which favours the designation of sensitive products and a special safeguard mechanism for developing countries. Switzerland and others raised concerns over the negotiating process, saying they felt excluded and kept in the dark. In addition to tough negotiations on agriculture in the lead-up to the release of the revised draft (see http://www.wto.org/english/tratop_e/dda_e/draft_text_gc_dg_30july04_e.htm), Members also faced significant difficulties in finding compromises on industrial market access, cotton and development issues. A revised draft released by the Chair of the WTO General Council, Shotaro Oshima, on 30 July formed the basis of the final agreement.

New package focuses on five areas, extends Doha round deadline

The new agreement emphasises the need to push ahead the talks in five areas, namely agriculture, non-agricultural market access (NAMA), development issues, trade facilitation and services. Regarding existing commitments in the rest of the Doha mandate, including intellectual property, dispute settlement, rules and environment, the agreement simply reaffirms continuing negotiations. Acknowledging the limited progress made so far in the Doha Round, Members postponed the 1 January 2005 deadline for concluding the talks to an as-yet unspecified date, at least until the sixth WTO Ministerial Conference to be held in Hong Kong in December 2005.

Among the priority issues, the framework for future agriculture negotiations adopted as a separate Annex was widely seen as the main breakthrough (see related story, this issue). On services, Members attempted to speed up the negotiations by setting a May 2005 deadline for countries to table their revised offers. Overcoming a last-minute divergence among developing countries, Members agreed on language for, inter alia, special and differential treatment and implementation-related issues that offered essentially a continuation of ongoing work and renewed deadlines (see related story, this issue).

Regarding the Singapore issues (i.e. investment, competition, transparency in government procurement and trade facilitation), Members agreed to drop all but one issue -- trade facilitation -- from the Doha work programme, stressing that "no work towards negotiations on any of these issues will take place within the WTO during the Doha Round". On trade facilitation, Members agreed to launch negotiations "with a view to further expediting the movement, release and clearance of goods, including goods in transit". The modalities for negotiations clearly spell out the need for special and differential treatment, technical assistance and capacity building for developing countries. This includes a caveat that these countries will not be required to implement the final agreement in cases where support and assistance for the required infrastructure is missing or where developing or least-developed country Members continue to lack the necessary capacity.

NAMA text sets out elements of modalities

The unwillingness of a number of Members to engage in serious NAMA negotiations until the level of ambition in agriculture had become clearer left NAMA as the major stumbling block as the talks drew to an end. Consequently, and in contrast to agriculture, the framework agreement on NAMA remained comparatively vague, outlining merely "initial elements for future work on modalities".

Members battled early on over how much of the controversial NAMA Annex B from the failed Cancun draft text to retain (see BRIDGES Weekly, 16 June 2004), and how or where developing country concerns could best be reflected. In the final NAMA text, they agreed to include an initial paragraph outlining developing country concerns in front of the Cancun NAMA language. This initial paragraph stipulates that "[a]dditional negotiations are required to reach agreement on the specifics of some of these [initial] elements" -- which relate to the tariff reduction formula, the starting point for binding unbound tariff lines, flexibilities for developing countries, and participation in the sectoral initiatives. While some, mostly developing countries, appear to view this language regarding additional negotiations on specifics as sufficiently qualifying their acceptance of the form and content of the ensuing language, some developed countries have suggested that the additional negotiations will simply involve tweaking the elements but maintaining their essential form.

India's industry groups generally welcomed the NAMA text. "It is satisfying to see that a number of our concerns have been addressed and reflected in the deal," said the Federation of Indian Chambers of Commerce & Industry. Similarly, the Confederation of Indian Industry, which saw the text as a much-needed boost for the flagging Doha negotiations. The US Council for International Business also welcomed the deal as a "good road map for completing the much-needed package of trade liberalisation measures". Both Zoellick and Lamy echoed these positive sentiments, with Lamy adding that the current language was an improvement over the Cancun text.

Cotton now part of broader ag talks as priority issue

Following a deal struck between the US and four African countries (Benin, Burkina Faso, Chad and Mali), on 29 July, Members agreed to make discussions on cotton an integral part of the agriculture negotiations rather than treating the issue on a separate track. In order to address the issue "ambitiously, expeditiously, and specifically", a special sub-committee will be established as part of the effort to "ensure appropriate prioritisation of the cotton issue independently from other sectoral initiatives". In addition, the Director-General was instructed to consult and work with relevant international organisations, including the Bretton Woods Institutions, on the development aspects of cotton.

Commenting on the text, Senegal's Minister of Commerce Ousmane Ngom described the agreement as "an important step in the right direction". The US cotton industry, however, criticised the deal. US National Cotton Council Chair Woody Anderson said, "Efforts in the WTO negotiations to target US cotton are unfair and threaten the round". Celine Charveriat of Oxfam criticised the agreement for failing to address the issue of US cotton subsidies, calling the deal a "serious betrayal of developing countries", in particular in light of the recent WTO ruling against US cotton subsidies (see BRIDGES Weekly, 23 June 2004).

Members broadly welcome agreement...

WTO Director-General Supachai Panitchpakdi welcomed the framework text as a "truly historic" achievement. He cited in particular the agreement to phase out export subsidies and the "significant breakthrough in cotton trade" as successes. He predicted that the progress on agriculture, NAMA and development would provide the necessary momentum for progress to be made in other areas.

Many of the major players, including the US, the EC, India, Brazil and China, expressed their satisfaction with the deal. "The Doha Round is back on track," said EC Trade Commissioner Pascal Lamy, cautioning, however, that "we have only walked half of the way". His sentiments were echoed by US Trade Representative Robert Zoellick. "We have laid out a map for the road ahead, he noted, noting that "the speed limits for how far and how fast we will lower trade barriers" remained to be negotiated.

Brazil's Foreign Minister Celso Amorim -- who was praised by both Zoellick and Lamy for his role in brokering the agreement -- believed everyone had gained, describing the agreements as "a good deal for trade liberalisation" as well as "a good deal for social justice", which he said came together in the decision to eliminate export subsidies. This more than adequately addresses India's concerns," said India's Commerce Minister Kamal Nath, referring in particular to future reductions in domestic support. "Generally speaking, the framework is not bad, though the developing countries are not fully satisfied," Chinese ambassador to the WTO, Sun Zhenyu, said.

...while civil society groups express frustration

Many civil society groups sharply criticised the 31 July deal. They pointed to what they saw as a secretive and undemocratic process of negotiations, which they said had excluded civil society organisations and even many country negotiators. Friends of the Earth International accused governments of turning a "blind eye to potential environmental and social implications" of trade liberalisation. They singled out the NAMA negotiations in particular, which they warned could deepen the deindustrialisation crisis in poor countries, forcing them to rely more heavily on unsustainable and harmful exports of natural resources.

Celine Charveriat of Oxfam lamented the lack of "cast-iron commitments" and "clear timeline for reform", adding that "if rich countries do not immediately put their promises into action, this declaration will become just one more stage in a long journey of disappointment and deception". She criticised in particular the agreement on NAMA, which she said "could lead to the destruction of developing country industries".

The developmental group Focus on the Global South described the deal as an "outcome of the arm-twisting, opaque and exclusionary process of negotiations". They echoed some Members' concerns that the negotiations had been dominated by the FIPs group at the expense of small countries.

ICTSD reporting; "Round-the-clock meetings produce 'historic' breakthrough," WTO, 31 July 2004; "WTO agrees to framework pact," HINDU, 31 July 2004; "Subsidies deal revives stalled Doha trade talks," FT, 2 August 2004; "Trade Talks Progress, Enviros Try to Shield Natural Resources," ENS, 2 August 2004; "Doha round enters stage of convalescence," TERRAVIVA, 2 August 2004; "WTO Outcome a catastrophe for poor," FOCUS ON THE GLOBAL SOUTH, 1 August 2004; "WTO deal endangers environment, development", FOEI, 1 August 2004; "WTO deal: Industry offers guarded welcome," TIMES OF INDIA, 2 August 2004; "International Groups Denounce World Trade Pact," ONEWORLD, 2 August 2004; "USCIB Welcomes progress on Doha Round," USCIP, 2 August 2004.